The Sprott Energy Transition ETF SETM was popping up slightly higher on Friday after breaking down from a rising channel pattern on Wednesday amid weak price action in the general stock market.
With the global energy transition underway as the world's economies attempt to move from fossil fuels to more sustainable solutions, interest in battery minerals and materials, which will help to power the change to cleaner energy has grown exponentially.
While Sprott offers several pure-play ETFs focused on battery metals, SETM offers exposure to a variety of the minerals and metals that will be necessary for the energy transition.
SETM tracks 107 uranium, lithium, copper, nickel, silver, manganese, cobalt, graphite and rare earth elements mining companies, and corresponds to the total return performance of the Nasdaq-listed Sprott Energy Transition Materials Index. SETM is a pure-play U.S.-listed ETF focusing on critical minerals necessary for the global clean energy transition, and companies that will be critical for EV battery independence.
The three largest holdings within SETM are First Quantum Minerals Ltd. FM, weighted at 5.55%, Freeport-McMoRan Inc, FCX weighted at 5.4% and Cameco Corp. CCJ, which is weighted at 5.22%.
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The SETM Chart: SETM broke bearishly from a rising channel on Wednesday, negating the uptrend the ETF has been trading in since May 31. The move lower came on lower-than-average volume, however, which indicates the bears aren't in control.
- On Friday, SETM was attempting to break back up into the channel and if the ETF can close the trading day within the pattern, the recent price action will serve as a bear trap and SETM could resume its uptrend.
- If SETM closes the trading day near its high-of-day, the ETF will form a bullish Marubozu candlestick, which could indicate higher prices will come again on Monday. If the ETF closes the session with a significant upper wick, SETM will form a shooting star candlestick, which could indicate the local top has occurred and the ETF will fall on Monday.
- SETM has resistance above at $18.34 and at $19.08 and support below at $17.93 and at $17.34.
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